UPDATE:DreamWorks Animation just disclosed the SEC investigation in its conference call with analysts and says it’s cooperating. The company took a $13.5M writedown on Turbo in February. DWA told analysts that it won’t comment further on the matter. Shares were down 8.2% after the news; if that holds tomorrow then it would be a 52-week low.

Separately, CEO Jeffrey Katzenberg declined to comment on the potential impact on his company if its distributor, Fox, acquires Time Warner. “Honestly, it’s way above my pay grade,” he says.

DWA said that it has bought from Paramount distribution rights to its feature films prior to 2013. They’ll now all be handled by Fox.

Recent Comments

Don't count on that Hollywood is stuck on liberal they wouldn't know what a cartoon like that...

Marie

8 months

Spielberg gave Obama an award dinner a month or so ago that wasn't enough?

Anonymous

8 months

Perhaps, but want they be expecting that to happen therefore be watching for the administration to make...

Katzenberg calls 2014 an investment year for DWA as it builds consumer products, TV programming, digital, and location-based entertainment. He adds that, generally speaking, the film “marketplace has gotten tougher. We’re competing against more movies than we have in the past.” Still, he says DWA is examining the lower-than-expected sales for Dragon 2.

PREVIOUS, 1:18 PM: The stock is down 7.3% in post-market trading after the studio disclosed disappointing Q2 results with its latest film, How To Train Your Dragon 2, still “in an un-recouped position.” DreamWorks Animation generated a net loss of $15.4M, down from a $22.3M profit in the period last year, on revenues of $122.3M, -42.7%. That’s way short of analyst expectations for revenues to hit $137.9M. And the loss, at 18 cents a share, far exceeded the consensus forecast for a 2 cent loss.

CEO Jeffrey Katzenberg says that Dragon 2 “will be a highly profitable film for the Company and DreamWorks Dragons will remain a very valuable franchise for many years to come.”

The film was released on June 13 — toward the end of the quarter — and only contributed $2.6M to DWA’s Q2 revenues. The feature film segment had $69.7M in revenues with a $23.9M gross profit. Home videos and international TV sales for Turbo added $11M to the top line. The Croods kicked in $25.5M from international pay TV, and library titles added $27.1M.

Television shows led by Turbo F.A.S.T on Netflix added $20M in revenues with a $1.2M gross profit. Consumer Products had $18.5M in revenue with a $7.3M gross profit.

29 Comments

It’s not that the market place has gotten tougher, it’s that your films have just stunk. Really, when will the shareholders understand that the problem at DWA is JK, nothing more and nothing less?

And what is the purpose of deficit financing a Turbo TV series (for Netflix no less), when the movie tanked? Is the show going to generate a sudden voracious appetite for Turbo merchandising? Or help maintain/build the brand until they make a Turbo sequel? And please let’s not even get into the Dreamworks shopping mall Christmas nonsense.

Things might turn around for DWA when they finally get the India and Chinese studios fully functional and they are able to get film production costs down by sending more and more work overseas instead of having to pay Local 839 wages.

As far as the TW takeover by Fox, typically disingenuous of JK to suggest it’s above his pay grade. I suspect that WB has always been JK’s target for a DWA sale (especially now since Kevin Tsujihara certainly needs to make some Iger like moves to cement his CEO status/reputation and jockey up to Bewkes’ side). If Rupert succeeds and gets TWX Kevin will likely be gone or at the least diminished in his authority, and the DWA sale to WB will never happen. JK had better call his buddy in Washington to get the FCC and SEC to rile things up for Rupert.

Anonymous • on Jul 29, 2014 1:18 pm

Hooray for outsourcing…you tool.

Smarter Than You • on Jul 29, 2014 1:18 pm

Hey dopey, Katzenberg is the guy outsourcing — the comment was sarcasm, look it up.

Anonymous • on Jul 29, 2014 1:18 pm

Perhaps, but want they be expecting that to happen therefore be watching for the administration to make a move.? The IRS scandal is heating up more with the release of Lehmets emails. I don’t believe Obama can afford to make this move. Murdock seem to really want this deal. Obama will throw Dreamworks under the bus if he has too. Obama has used up most of his political capital already. Don’t think he has much to spare with 2 1/2 years left in office.

Justin Case • on Jul 29, 2014 1:18 pm

That had to be the worst animated movie of all times. Even my kid did not like it.

Joel Rolley • on Jul 29, 2014 1:18 pm

Hey DWA here is free financial advice… try and make a conservative leaning animation and parents who lean conservative (49% of this country taken from 2012 election (that’s a fact Deadline)) and they might take their kids to go see the film and pay their hard earned money that the government so kindly lets them keep (in some states you are able to keep just under half what you earn (that’s a fact too Deadline).

Jai Dayal • on Jul 29, 2014 1:18 pm

Makes sense to me!

I mean, conservatives (ESPECIALLY the GOP) are all white, filthy rich and have plenty of money to spend on kids movies (just ask any progressive Democrat, they’ll tell you!).

So, why don’t you just write your movies to the part of the market with the money, instead of writing progressive socialist/communist propaganda pieces that even the starving, desperate minorities and the poor, penniless Democrats don’t want to see?

‘cuse me… gotta find a mop to clean up all of this sarcasm on the floor….

DrG • on Jul 29, 2014 1:18 pm

HAHA…but, wouldn’t that all be propaganda? HOORAY!

Dorothy Zbornak • on Jul 29, 2014 1:18 pm

What kept you?

Marie • on Jul 29, 2014 1:18 pm

Don’t count on that Hollywood is stuck on liberal they wouldn’t know what a cartoon like that look like. Also people have to take into account that we are in a recession no matter what Obama says. Have you seen food prices?

Kevin Clouser • on Jul 29, 2014 1:18 pm

The problem is that DWA has been putting out a lot of crap lately. Jeffrey K needs to take deep, hard look at what is wrong with his ship, before it ends up like the Titanic.

kazzenberg better take better stock at why dreamworks suddenly has earned the sec to start snooping around them.all over one film they seem to have tried to not taken such a hit on for not living up to profits they thought turbo would make.for one thing holllywood doesn’t like is someone getting in the feds cross hairs like dremworks with the sec now.

Charlie • on Jul 29, 2014 1:18 pm

This is just one more example of how Hollywood as a whole has completely jumped the shark.

ted • on Jul 29, 2014 1:18 pm

Called “creative book keeping

ted • on Jul 29, 2014 1:18 pm

Getting sick and tired of animation. Alright, already!

JustinV • on Jul 29, 2014 1:18 pm

Dragon 2 was terribly boring. I don’t know how the RT score was so high. My son was highly fidgety at the theater, even though the first installment completely captured his attention. And I actually dozed off for 20 minutes, which is only the second time in my life that’s ever happened at the movies. It’s about time DWA’s returns matched the quality of its output.

I think it’s wonderful he’s going to outsource future animation to China. I for one welcome our new Chinese overlords.

scott • on Jul 29, 2014 1:18 pm

Woah. Somebody tell Obama who the sec is investigating. This needs to stop.

justsayin' • on Jul 29, 2014 1:18 pm

Gee, didn’t Katz just get an “Arts” Award from the Prez?

tngilmer • on Jul 29, 2014 1:18 pm

I guess they did not donate enough to Obama.

AlexKx • on Jul 29, 2014 1:18 pm

Where’s Michael Jackson?

Anonymous • on Jul 29, 2014 1:18 pm

If HTTYD2 had “lower than expected sales” – it is because DWA WAY under-promoted it and under-merchandised it. It’s a fantastic film – better than the first, well reviewed, and loved by its audience who are chomping at the bit for the next one! DWA has nobody to blame but themselves!

Anonymous • on Jul 29, 2014 1:18 pm

I wonder if DW can CGI in someone more deserving of the new Batman role.